Communications Gap Feeds a Revolution (San Francisco Chronicle)

“Things were going fine until he saw that picture,” reports a senior source close to the Indonesian presidential palace. “Then his attitude changed completely.”

“That picture” was a photo showing IMF Managing Director Michel Camdessus standing — arms crossed — looking down at President Suharto as he signed the revised $43 billion bailout package in January.

In the stylized culture of Java, in which respect for the ruler is paramount and body language communicates far more than words, crossing ones arms is, at best, a sign of arrogance, and at worst, a conscious insult.

Even to a Western eye, the picture begged for the caption: “Suharto signs articles of surrender.”

“If only Camdessus had known…” IMF officials said when the media firestorm broke. Indeed. But, it now appears, the damage was already done.

The moment Suharto saw the photo, according to the source, the deal was dead. Within days, the Indonesia president was back-peddling. Within weeks, the flag of nationalism had been waved.

“We are talking about dignity,” said a senior government official of the incident. “We are talking sovereignty. We want help, but at what cost?”

The IMF chief had done the one thing every school kid who has ever seen a Kung Fu movie knows is the ultimate sin, he made Suharto lose face.

“Because of this body language, we are teetering on the brink of a global recession,” declared the palace source.

Cynics might say Suharto’s desire to protect the wealth of his family and cronies also had a little something to do with his failure to implement reforms, but the incident vividly demonstrates the huge communications gap fueling the ongoing standoff.

For if Western negotiators haven’t been saying the right things with their bodies, the Indonesians have failed to communicate in other, equally critical, ways.

At the root of this huge country’s economic morass is a crisis of confidence fed by a culture of secrecy in which candor is rare and transparency is a dirty word.

Indonesia shares with its neighbors the fundamental weaknesses that prompted the collapse of currencies and stock markets across the region. But while South Korea appears to have turned the corner and Thailand has reason for hope, Indonesia remains mired in an economic crisis that threatens the country’s fragile social balance.

The basic reason: A complete lack of credibility; the natural legacy of a business and political culture in which decisions are routinely made behind closed doors.

“I had no idea when I was here [last year] that there was $65 billion, or whatever the number is, of unhedged dollar borrowings and I don’t think the Indonesians knew,” World Bank President James Wolfensohn admitted earlier this year. It was a telling reflection on a culture in which even the most mundane facts about a company are kept sheltered from public view.

Western businesspeople and politicians long ago learned that candor in good times creates a reserve of goodwill which can be banked for times of trouble. In that, Indonesia is as bankrupt as it is financially.

Until recently, the massive conglomerates that drive this economy were family-owned. Company business was no one’s business but their own. Now that they are publicly-listed, little has changed.

For most of Indonesia’s corporate tycoons, full disclosure is a movie title. Problems are something you pretend don’t exist. Uncomfortable questions from the media or shareholders are best ignored in the hope they will go away.

When financial institutions are used as personal piggy banks and government ministers earning $250 a month live like sultans, inquiring minds need not apply.

The traditional Javanese shadow puppet play, in which the characters act out the story behind an opaque screen, is an overused but apt analogy for the veil of secrecy behind which business and government operates here.

Decisions are handed down without discussion or debate. Inside deals are common currency. The most innocuous facts about a company are kept under wraps. Even annual reports are routinely issued a year or two late.

The result, in the face of national economic collapse, is hardly a surprise: Workers don’t believe the bosses, the bosses don’t believe the government, and Western investors don’t believe anyone at all.

When the government reports the sun is shining, the world reaches for an umbrella, and officials genuinely don’t understand why. To them, the crisis of confidence is all the result of twisted Western reporting and foreign profiteers.

Meanwhile, representatives of the world’s democracies tell a man who has held unquestioned power for 32 years, in a system based on the feudal Javanese notion that benefits flow from the patriarch to the obedient, that the very foundation of his rule must be scrapped overnight

For the moment, it seems, the culturally blind are preaching openness to the media-impaired.